JIT liquidity
A strategy that adds AMM liquidity just before a trade and removes it shortly after to capture fees with limited exposure.
- Also known as
- just-in-time liquidity
Just-in-time liquidity appears in AMMs with concentrated liquidity, where an actor detects a pending swap and briefly supplies liquidity near the execution price. The goal is to earn fees while minimizing time exposed to inventory risk.
JIT liquidity can improve execution for a specific trader by deepening liquidity at that moment, but it may reduce fee revenue for passive LPs who provide continuous depth. Protocol design determines whether this is encouraged or discouraged.
Related terms
4 linkedExplore connected entries beyond the alphabetical index.
Decentralized Exchange
→A decentralized exchange (DEX) lets users trade digital assets from their wallets through smart contracts or peer-to-peer settlement.
Front-Running
→Front-running means acting on knowledge of a pending trade or transaction to execute first and capture an advantage.
Impermanent loss
→The underperformance an AMM liquidity provider can face versus simply holding the deposited assets when prices diverge.
Flash Loan
→A flash loan is an uncollateralized DeFi loan that must be borrowed and repaid within the same transaction.
All terms and definitions may update as the Cryptionary improves.
